IMF Managing Director Dominique Strauss-Kahn announced Friday that the IMF's Board of Executive Directors has approved historic reforms, including shifting more than 6 percent of quotas from advanced economies to "dynamic" emerging and developing countries to strengthen its legitimacy and effectiveness.

"The reforms have been fully adopted by the board," said the IMF chief at a press conference in Washington.

After this reform, China will become the third biggest member in the Washington based International Monetary Fund. The move also lifts large emerging powers India, Brazil and Russia into the top 10 ranks of the 187-member institution.

The 10 largest IMF members will consist of the United States, Japan, the "BRICs" (Brazil, China, India, the Russian Federation), and the four largest European countries (Britain, France, Germany and Italy).

"This historic agreement is the most fundamental governance overhaul in the Fund's 65-year history and the biggest ever shift of influence in favor of emerging market and developing countries to recognize their growing role in the global economy," Strauss-Kahn said.

As part of the far-reaching reforms, first clinched by finance ministers of Group of 20 leading economies in South Korea last month, more than 6 percent of quota shares will be shifted, while protecting the quota shares and voting power of the poorest members. The Board also endorsed proposals that would lead to a more representative, all-elected Executive Board.

The Executive Board, which oversees the IMF' s day-to-day operations, recommended the reform package to the Board of Governors, which represents all 187 members and must approve the proposed reforms.

Following the Board of Governors' approval, the proposed quota increases and the amendment will have to be accepted by the membership, which in many cases involves parliamentary approval, and which members will make best efforts to complete by the IMF's Annual Meetings 2012.

The Executive Board endorsed a timeline that calls for the quota increase and realignments to take effect by the Annual Meetings of October 2012, and Executive Board reforms to be implemented no later than the subsequent Executive Board election, which is scheduled in late 2012.

Strauss-Kahn said that the IMF reforms have taken a lot of energy and time in the past year, "I am very happy that it has been solved."

Formed after World War II as a key international organization to coordinate global economic and financial issues, the IMF has long been dominated by Western powers.

The IMF reform has become an international focus as the world economic balance has been changing dramatically during the past decade, with emerging market and developing countries gaining more power in the global economic arena.

In the spring meetings this year, the IMF's sibling institution World Bank approved similar reform to give emerging market and developing countries a bigger say.

World Bank President Robert Zoellick said then that the power shift of the international institution was to reflect the profoundly changing multipolar global economic reality.